Contents Newsflash Market Comment BCS s Chen Zhao on fears of a Chinese economic collapse Economic Update...

Transcription

1 17 March 2014

2 Contents Contents... 2 Newsflash... 3 Market Comment... 3 BCS s Chen Zhao on fears of a Chinese economic collapse... 3 Economic Update... 5 Weekly Market Analysis... 8 STANLIB Money Market Fund... 9 STANLIB Enhanced Yield Fund... 9 STANLIB Income Fund... 9 STANLIB Flexible Income Fund STANLIB Multi-Manager Absolute Income Fund... 10

3 Newsflash Markets all pulled back last week, from close to record levels, on the back of concerns about the Chinese economy slowing and the tension in the Ukraine. Market Comment Markets all pulled back last week, from close to record levels, on the back of concerns about the Chinese economy slowing and the tension in the Ukraine. The US lost 2%, Europe 2.9% and the JSE ALSI 2.9%. Mining shares on the JSE lost 3.2%, which is not bad considering the sharp fall in the copper price and the iron ore price - and considering the firmer rand. The copper price is down 12% in dollars so far in 2014 and the iron ore price is down 15% over the same period. These are big knocks for the two most profitable commodities. The relative strength of the mining shares by comparison (down less than the commodity prices) is therefore very interesting, at least at this stage. See the copper price chart below, in dollars, showing the lowest price in 4 years. Source: I-Net Bridge BCA s Chen Zhao on fears of a Chinese economic collapse BCA S Chen Zhao addresses the question about whether China is on a precipice partly because of the sharp fall in the base metal prices and the Chinese stock market. Chen highly doubts that China is on the verge of its very own Lehman moment. The lynch mob is screaming that the Chinese economy is burdened with overcapacity, bad debt and diminishing returns. They say that a chaotic and very painful deleveraging process is all but inevitable. Chen thinks this view is flawed and practically dangerous. He says based on the popular yardstick debt to GDP (size of economy), the Chinese economy is seemingly very leveraged: the non-financial sector debt/gdp ratio has surged since 2010, approaching 250% of GDP from 100% in among the highest in the world. But he thinks this is a deeply flawed view based on a very superficial observation. The fundamental fallacy is that it largely ignores three key factors that determine the level of indebtedness of an economy: the gross savings rate, the balance-of-payments position and the velocity of money.

4 China s domestic savings rate is about 50% of GDP, which translates into about US$4.5 trillion in new savings every year. To move this vast pool of savings into investment, the level of borrowing activity, or total indebtedness, must stay high. Savings, investment, borrowing activity and GDP growth are all strongly positively correlated. In the end, GDP growth is driven by both capital spending and consumption. Since 2008 the Chinese government has taken actions to beef up domestic spending in order to keep economic growth afloat. The net result has been a sharp rise in domestic debt. Therefore the escalating debt in China is simply a mirror image of the fallout in external spending power. China s domestic savings rate has increased steadily since 2001, while the velocity of money and credit has reduced. Chen thinks that the Chinese economy may actually be under-leveraged, since although the gross publicsector debt is only 25% of GDP, the net debt position of the Chinese government is negative, running at roughly -18% of GDP. This is because the Chinese government owns vast amounts of liquid foreign exchange reserves. The same measure is 87% for the US and 85% for the UK> Hence the Chinese public sector is very underleveraged. In China well over 50% of the total funds allocation is done through retained profits, compared with 17% for the US and 30% for Europe. The Chinese private sector relies a lot on retained earnings to finance investment and business operations. All-in-all Chen says the systemic risk in the Chinese economic and financial system remains well under control: China over-saves and under-consumes, runs a chronic current-account surplus and has been a creditor to the rest of the world for a long time. The household sector is asset rich and underleveraged. The government sector also has a negative net liability and has a large amount of foreign reserves at its disposal. So don t believe the fear mongers, says Chen! Private-sector defaults will happen, as they do in a marketbased system. The fact that the Chinese government is allowing corporate defaults is actually a positive sign that indicates the authorities are more serious about reforming and restructuring the economic system. As far as financial markets are concerned, the big-cap share indices, which are concentrated in state monopolies, will continue to be pressured by a lack of credit expansion and intensifying supply-side restructuring aimed at deregulating the economy and liberalising the financial system. So small-cap shares should outperform the big indices and state-owned enterprises. But he says that with Chinese growth remaining below trend and the trade-weighted dollar holding steady, any rally in commodity prices will be muted. Given that the central bank is in no hurry to open the credit taps, both Chinese shares and industrial metals will likely continue to lag the S&P 500 Index. A meaningful rally in commodity prices and Chinese share indices (the big shares) will only occur when the central bank relaxes credit policy, which could come towards this summer. Paul Hansen Director: Retail Investing

5 Economic Update Last week s local highlight was on the release of the Reserve Bank s Quarterly Economic Bulletin, Q In the final quarter of 2013 South Africa s GDP grew by 3.8%q/q, annualised. However, in the same quarter gross domestic expenditure (GDP) declined by a massive 3.6%q/q, annualised. The four quarter moving average growth of GDE is now below GDP growth for the first time since the global financial market crisis. The fall-off in GDE growth largely reflects a very sharp decline in imports of goods and services, which fell by a massive 18.9%q/q, annualised in the final quarter of This reflects a combination of a meaningful slowdown in consumer spending, very little growth in fixed investment activity, moderate growth in government spending and a massive fall-off in inventories. There was, unfortunately, a further significant increase in the residual, which suggests the data will eventually be revised. Overall, the SA economy is in the process of rebalancing after an extended phase of growing domestic spending faster than domestic production (which always reflects in a larger current account deficit). This rebalancing has come about because consumer s are under pressure, the Rand has weakened appreciably and the interest rates have increased. Unfortunately, most of the rebalancing in Q occurred through a reduction in imports and not through a boost in exports. This trend appears likely to continue over the coming quarters, with GDP growth out-pacing GDE growth. This is never a good environment for companies that are heavily dependent on domestic earnings. In the final quarter of 2013, South Africa s current account deficit improved sharply to -5.1% of GDP, down from a revised -6.4% of GDP in Q3 2013, -6.2% of GDP in Q and -5.7% of GDP in Q This was much better than market expectations for a deficit of -5.5% of GDP (STANLIB -5.5%). In value terms, the current-account deficit narrowed to R178.9 billion from R215.8 billion in Q (these are annualised numbers). For 2013 as a whole, the current-account deficit was recorded at R197.2bn (-5.8% of GDP), bigger than the 2012 deficit of -5.2% of GDP. The better than expected Q current account deficit largely reflects the combination of an increase in exports and a decline in imports. In addition, although the net dividend outflows worsened in the quarter there was a further meaningful improvement in travel receipts, which have reached another all-time record high. SA s trade deficit narrowed significantly to -1.3% of GDP in Q4 2013, compared with a revised -2.7% of GDP in Q As recently as Q4 2011, South Africa recorded a surplus on the trade account. During the last quarter of 2013, the value of merchandise exports rose by a further 0.8%q/q, after rising by a substantial 5.0%q/q in Q In contrast, import volumes fell by a significant 5.5%q/q in the final quarter of 2013, after increasing in each of the preceding three quarters. The combination of lower imports and increased exports was sufficient to narrow the trade deficit from an annualised R90.9bn in Q to R44.6bn in Q4 2013, a very welcome improvement. Unsurprisingly, there was a meaningful deterioration in the net dividend outflows in the final quarter of 2013, which increased from R45.45bn in third quarter of 2013 to R72.26bn in the last quarter of This was due to an increase in dividend outflows, which rose from R80.6bn in Q to R83.1bn in Q4 2013, while dividend inflows fell from R49.2bn to R22.1bn over the same period. In general, dividend outflows continue to increase on a trend basis reflecting the large foreign ownership of South African equities, while dividend inflows remain fairly erratic. Overall, the extent of the net dividend outflows from South Africa remain very substantial at 2.1% of GDP, and are a constant drain on the current account. Fortunately, the improvement in SA travel receipts continued in Q During the fourth quarter of 2013, travel receipts rose by a further and very substantial R4.2 billion to R94.2 billion, which is once again the best level ever recorded, and far exceeds the level of travel receipts recorded during the Soccer World Cup (Q2 2010). Over the past year, SA travel receipts are up a very encouraging R11.9 billion or 14.4%y/y. The turnaround in travel inflows is extremely welcome, given the disappointing fall-off in inward bound tourism following the world cup in 2010 as well as South Africa s poor performance in the recent international survey of travel and tourism competitiveness. Travel payments (outflows) increased marginally in Q to R34.6bn (up R0.9bn quarter-on-quarter). The net result was that the surplus on the Travel Account jumped by R3.3 billion in Q to a substantial and all-time record of R59.6 billion. The SA tourism industry is, currently, one of the few growth stories SA is enjoying. Looking forward, there is increasing evidence to suggest that the weaker Rand is now helping to improve SA s trade balance, especially the fall-off in imports. Given the current slowdown in the domestic economy, we still expect import demand to ease somewhat over the coming months.

6 A significant portion of South Africa s growth in imports (at least since the beginning of 2010) has been driven by consumer activity, including the importation of motor vehicles and parts as well as cell phones. Equally, the Rand weakness should also start to benefit exporters, while improved stability in the gold and platinum mining sector and a pick-up in world growth during 2014 should also help exports. This moderation in imports and boost in exports should translate into an improved trade and current account deficit over the next 9 to 12 months; which will hopefully ease some of the pressure on the Rand. Beyond that, the expected increase in infrastructure spending is likely to result in a further rise in imports of machinery and equipment. Crucially, the expected improvement in SA s external position is starting to reflect in the data. This is, effectively, a rebalancing of the SA economy, especially the larger current account deficit, after a few years of the country consuming more than it is producing. Unfortunately, most of the rebalancing in Q is occurring through a reduction in imports and not through a boost in exports. Consequently, the domestic economy will feel extremely sluggish while the rebalancing occurs, but hopefully the country is then able to grow in a more sustainable manner. In Q SA fixed investment spending rose by a disappointing 3.1%q/q, annualised, down from 7.0%q/q growth in Q3 2013, 5.6%q/q in Q and 3.8%q/q in Q The latest slowdown in investment activity was mostly driven by a fall-off in the rate of growth of private sector investment. In contrast, investment activity by general government has improved noticeably in the past 6 months, albeit off a relatively low base. Investment spending by public corporations continues to stagnate. The rate of growth in capital spending by general government rose by an encouraging 9.2%q/q in Q4 2013, up from a revised 9.0%q/q in Q This included increased spending by provincial and local government departments on upgrading public roads, water, sanitation healthcare and education. In the February 2014 National Budget the Minister of Finance highlighted that there is an increased emphasis on uplifting local government infrastructural. In contrast, fixed capital expenditure by public corporations increased by a mere 0.8%q/q in Q4 2013, after rising by only 0.4%q/q in Q This suggests that the major public corporations (Eskom, Transnet and SANRAL) are, effectively, struggling to accelerate their respective build programmes despite ambitious budgets. Overall, infrastructure investment activity remains well below expectations and the promise of wide-spread infrastructural development is proving difficult to keep. For example in 2012/2013 the government budgeted R255.6bn for public sector infrastructure spending. However, according to the 2014 National Budget the public sector spent a total of R217.7bn, which is effectively only 85% of budget. The rate of growth in real fixed capital formation by private business fell-off noticeably in the final quarter of 2013, rising by only 2.4%q/q compared with a heavily revised growth rate of 8.6%q/q in Q The mining sector continued to invest in ongoing projects, despite the labour unrest, with the bulk of spending going on machinery and equipment. In contrast, real investment spending by the manufacturing sector slowed appreciably. Private sector investment activity has been, to some extent, buoyed by a sharp increase in capital spending on wind farms and solar plants as part of the Renewable Energy Independent Power Producer Procurement Programme (especially in the Eastern and Northern Cape). Some of these projects, however, were completed in the final quarter of Overall, the rate of increase in South Africa s fixed investment activity remains well below target. Currently, South Africa spends 19.4% of its national income on capital expenditure. That is far too little given the country s extensive infrastructure backlog. Ideally, South Africa should be spending a minimum of 25% of GDP on investment activity, and maintaining it at that level for more than a decade. Internationally, there is a reasonably clear relationship between increased investment spending and sustained higher GDP growth, with the level of investment ultimately determining the level of employment. In the February 2014 National Budget the Minister of Finance stated that increased investment in the economy by both the private and public sector is at the heart of creating jobs and growth We are in complete agreement with that statement, which suggests that much more needs to be done to encourage a more robust investment environment. In the emerging markets, the Bank of Indonesia kept its interest on hold at 7.5% at its meeting on 13 March 2014 which was in line with market expectations. This was the fourth meeting where the central bank has opted to maintain a tight stance on monetary policy as inflation is still outside the target band. Inflation was 7.7%y/y in February 2014, down from 8.2% in January however still higher than the target band of 3.5% 5.5%. The currency did not fare well in 2013 as it depreciated by 21% against the dollar due to concerns over its current account and budget deficit. The country has been grouped with other double deficit Nations most likely to suffer from external currency shocks namely South Africa, Brazil, India and Turkey (formerly termed fragile five now called double deficit club). The current account deficit has narrowed quite significantly after authorities hiked rates by 175 basis points last year and the currency has appreciated by 6.9% since the beginning of the year.

7 Ghana s inflation rate came in at 14% y/y in February 2014 which was up from 13.8% recorded in January. This continues the upward trend which began in January 2013 and inflation is currently above the target rate of 7.5 and 11.5%. The main culprits again were housing, water, electricity, gas and other fuels, which constitute 9.5% of the CPI basket, as subsidies were cut in some areas and tariffs were increased in others. The currency has continued to weaken and hit new record lows against the dollar due to the widening deficit in its current account and foreign capital outflows from emerging markets which puts additional pressure on inflation. In an attempt to impede the depreciation on the currency the central bank has introduced capital controls in an effort to encourage more use of the local currency. For example: banks are now not allowed to grant a foreign currency denominated loan to a customer who is not a foreign exchange earner and Transfers from one foreign currency denominated account to another is not permitted. Please follow our regular economic updates on Kevin Lings, Laura Jones & Kganya Kgare (STANLIB Economics Team)

8 Weekly Market Analysis Currencies/ Indices/ Commodities Friday s Close 14/03/14 Weekly Move (%) YTD (%) Indices *MSCI World US Dollar *MSCI World Rand *MSCI Emerging Market US Dollar *MSCI Emerging Market Rand All Share Index US Dollar All Share Index Rand All Bond Index Listed Property J Currencies US Dollar/Rand Euro/Rand Sterling/Rand Euro/US Dollar Commodities Oil Brent Crude Spot Price ($/bl) Gold Price $/oz Platinum Price S/oz Source: I-Net Bridge * MSCI - Morgan Stanley Capital International

9 Rates These rates are expressed in nominal and effective terms and should be used for indication purposes ONLY. STANLIB Money Market Fund Nominal: Effective: 5.34% per annum 5.47% per annum STANLIB is required to quote an effective rate which is based upon a seven-day rolling average yield for Money Market Portfolios. The above quoted yield is calculated using an annualised seven-day rolling average as at 14 March This seven- day rolling average yield may marginally differ from the actual daily distribution and should not be used for interest calculation purposes. We however, are most happy to supply you with the daily distribution rate on request, one day in arrears. The price of each participatory interest (unit) is aimed at a constant value. The total return to the investor is primarily made up of interest received but, may also include any gain or loss made on any particular instrument. In most cases this will merely have the effect of increasing or decreasing the daily yield, but in an extreme case it can have the effect of reducing the capital value of the portfolio. STANLIB Enhanced Yield Fund Effective Yield: 6.06% STANLIB is required to quote a current yield for Income Portfolios. This is an effective yield. The above quoted yield will vary from day to day and is a current yield as at 14 March The net (after fees) yield on the portfolio will be published daily in the major newspapers together with the all-in NAV price (includes the accrual for dividends and interest). This yield is a snapshot yield that reflects the weighted average running yield of all the underlying holdings of the portfolio. Monthly distributions will consist of dividends (currently tax exempt) and taxable interest. Interest will also be exempt from tax to the extent that investor s are able to make use of the applicable interest exemption as currently allowed by the Income Tax Act. The portfolio s underlying investments will determine the split between dividends and interest. STANLIB Income Fund Effective Yield: 6.55% Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. A schedule of fees and charges and maximum commissions is available on request from the company/scheme. CIS can engage in borrowing and scrip lending. Commission and incentives may be paid and if so, would be included in the overall costs. The above quoted yield will vary from day to day and is a current yield as at 14 March 2014.

10 STANLIB Extra Income Fund Effective Yield: 6.16% Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. A schedule of fees and charges and maximum commissions is available on request from the company/scheme. CIS can engage in borrowing and scrip lending. Commission and incentives may be paid and if so, would be included in the overall costs. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. The above quoted yield will vary from day to day and is a current yield as at 14 March STANLIB Flexible Income Fund Effective Yield: 6.27% Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. A schedule of fees and charges and maximum commissions is available on request from the company/scheme. CIS can engage in borrowing and scrip lending. Commission and incentives may be paid and if so, would be included in the overall costs. The above quoted yield will vary from day to day and is a current yield as at 14 March STANLIB Multi-Manager Absolute Income Fund Effective Yield: 5.98% Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. A schedule of fees and charges and maximum commissions is available on request from the company/scheme. CIS can engage in borrowing and scrip lending. Commission and incentives may be paid and if so, would be included in the overall costs. The above quoted yield will vary from day to day and is a current yield as at 14 March 2014.

11 Glossary of terminology Bonds A bond is an interest-bearing debt instrument, traditionally issued by governments as part of their budget funding sources, and now also issued by local authorities (municipalities), parastatals (Eskom) and companies. Bonds issued by the central government are often called gilts. Bond issuers pay interest (called the coupon ) to the bondholder every 6 months. The price/value of a bond has an inverse relationship to the prevailing interest rate, so if the interest rate goes up, the value goes down, and vice versa. Bonds/gilts generally have a lower risk than shares because the holder of a gilt has the security of knowing that the gilt will be repaid in full by government or semi-government authorities at a specific time in the future. An investment in this type of asset should be viewed with a 3 to 6 year horizon. Cash Collective Investments Compound Interest Dividend Yields Dividends Earnings per share An investment in cash usually refers to a savings or fixed-deposit account with a bank, or to a money market investment. Cash is generally regarded as the safest investment. Whilst it is theoretically possible to make a capital loss investing in cash, it is highly unlikely. An investment in this type of asset should be viewed with a 1 to 3 year horizon. Collective investments are investments in which investors funds are pooled and managed by professional managers. Investing in shares has traditionally yielded unrivalled returns, offering investors the opportunity to build real wealth. Yet, the large amounts of money required to purchase these shares is often out of reach of smaller investors. The pooling of investors funds makes collective investments the ideal option, providing cost effective access to the world s stock markets. This is why investing in collective investments has become so popular the world over and is considered a sound financial move by most investors. Compound interest refers to the interest earned on interest that was earned earlier and credited to the capital amount. For example, if you deposit R1 000 in a bank account at 10% and interest is calculated annually; your balance will be R1 100 at the end of the first year and R1 210 at the end of the second year. That extra R10, which was earned on the interest from the first year, is the result of compound interest ("interest on interest"). Interest can also be compounded on a monthly, quarterly, half-yearly or other basis. The dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its share price. The higher the yield, the more money you will get back on your investment. When you buy equities offered by a company, you are effectively buying a portion of the company. Dividends are an investor s share of a company s profits, given to him or her as a part-owner of the company. Earnings per share is a measure of how much money the company has available for distribution to shareholders. A company s earnings per share is a good indication of its profitability and is generally considered to be the most important variable in determining a company s share price.

12 Equity Financial Markets Fixed Interest Funds Gross Domestic Product (GDP) Growth Funds Industrial Funds Investment Portfolio JSE Securities Exchange Price to earnings ratio Property Resources and Basic Industries Funds A share represents an institution/individual s ownership in a listed company and is the vehicle through which they are able to share in the profits made by that company. As the company grows, and the expectation of improved profits increases, the market price of the share will increase and this translates into a capital gain for the shareholder. Similarly, negative sentiment about the company will result in the share price falling. Shares/equities are usually considered to have the potential for the highest return of all the investment classes, but with a higher level of risk i.e. share investments have the most volatile returns over the short term. An investment in this type of asset should be viewed with a 7 to 10 year horizon. Financial markets are the institutional arrangements and conventions that exist for the issue and trading of financial instruments. Fixed interest funds invest in bonds, fixed-interest and money market instruments. Interest income is a feature of these funds and, in general, capital should remain stable. The Gross Domestic Product measures the total volume of goods and services produced in the economy. Therefore, the percentage change in the GDP from year to year reflects the country's annual economic growth rate. Growth funds seek maximum capital appreciation by investing in rapidly growing companies across all sectors of the JSE. Growth companies are those whose profits are in a strong upward trend, or are expected to grow strongly, and which normally trade at a higher-thanaverage price/earnings ratio. Industrial funds invest in selected industrial companies listed on the JSE, but excluding all companies listed in the resources and financial economic groups. An investment portfolio is a collection of securities owned by an individual or institution (such as a collective investment scheme). A funds portfolio may include a combination of financial instruments such as bonds, equities, money market securities, etc. The theory is that the investments should be spread over a range of options in order to diversify and spread risk. The primary role of the JSE Securities Exchange is to provide a market where securities can be freely traded under regulated procedures. Price to earnings ratio or p: e ratio is calculated by dividing the price per share by the earnings per share. This ratio provides a better indication of the value of a share, than the market price alone. For example, all things being equal, a R10 share with a P/E of 75 is much more expensive than a R100 share with a P/E of 20. Property has some attributes of shares and some attributes of bonds. Property yields are normally stable and predictable because they comprise many contractual leases. These leases generate rental income that is passed through to investors. Property share prices however fluctuate with supply and demand and are counter cyclical to the interest rate cycle. Property is an excellent inflation hedge as rentals escalate with inflation, ensuring distribution growth, and property values escalate with inflation ensuring net asset value growth. This ensures real returns over the long term. These funds seek capital appreciation by investing in the shares of companies whose main business operations involve the exploration, mining, distribution and processing of metals, minerals, energy, chemicals, forestry and other natural resources, or where at least 50 percent of their earnings are derived from such business activities, and excludes service providers to these companies.

13 Smaller Companies Funds Value Funds Growth Funds Smaller Companies Funds seek maximum capital appreciation by investing in both established smaller companies and emerging companies. At least 75 percent of the fund must be invested in small- to mid-cap shares which fall outside of the top 40 JSE-listed companies by market capitalisation. These funds aim to deliver medium- to long-term capital appreciation by investing in value shares with low price/earnings ratios and shares which trade at a discount to their net asset value. Growth funds seek maximum capital appreciation by investing in rapidly growing companies across all sectors of the JSE. Growth companies are those whose profits are in a strong upward trend, or are expected to grow strongly, and which normally trade at a higher-thanaverage price/earnings ratio. Sources: Unit Trust and Collective Investments (September 2007), The Financial Sector Charter Council, Personal Finance (30 November 2002), Introduction to Financial Markets, Personal Finance, Quarter , Investopedia ( and The South African Financial Planning Handbook 2004.

14 Disclaimer The price of each unit of a domestic money market portfolio is aimed at a constant value. The total return to the investor is primarily made up of interest received but, may also include any gain or loss made on any particular instrument. In most cases this will merely have the effect of increasing or decreasing the daily yield, but in an extreme case it can have the effect of reducing the capital value of the portfolio. Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. An investment in the participations of a CIS in securities is not the same as a deposit with a banking institution. CIS are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available on request from STANLIB Collective Investments Ltd (the Manager). Commission and incentives may be paid and if so, would be included in the overall costs. A fund of funds is a portfolio that invests in portfolios of collective investment schemes, which levy their own charges, which could result in a higher fee structure for these portfolios. Forward pricing is used. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. TER is the annualised percent of the average Net Asset Value of the portfolio incurred as charges, levies and fees. A higher TER ratio does not necessarily imply a poor return, nor does a low TER imply a good return. The current TER cannot be regarded as an indication of future TERs. Portfolios are valued on a daily basis at 15h30. Investments and repurchases will receive the price of the same day if received prior to 15h30. Liberty is a full member of the Association for Savings and Investments of South Africa. The Manager is a member of the Liberty Group of Companies. As neither STANLIB Wealth Management Limited nor its representatives did a full needs analysis in respect of a particular investor, the investor understands that there may be limitations on the appropriateness of any information in this document with regard to the investor s unique objectives, financial situation and particular needs. The information and content of this document are intended to be for information purposes only and STANLIB does not guarantee the suitability or potential value of any information contained herein. STANLIB Wealth Management Limited does not expressly or by implication propose that the products or services offered in this document are appropriate to the particular investment objectives or needs of any existing or prospective client. Potential investors are advised to seek independent advice from an authorized financial adviser in this regard. STANLIB Wealth Management Limited is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 37 of 2002 (Licence No. 26/10/590) Compliance No.: D9051R 17 Melrose Boulevard, Melrose Arch, 2196 P O Box 202, Melrose Arch, 2076 T (SA Only) T+27(0) E contact@stanlib.com Website STANLIB Wealth Management Limited Reg. No. 1996/005412/06 Authorised FSP in terms of the FAIS Act, 2002 (Licence No. 26/10/590) STANLIB Collective Investments Limited Reg. No. 1969/003468/06